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able to take down on this project versus the cops? >> it's approximately 20 basis points, .2 or less in the past few. >> that's commercial paper. >> correct. >> and the cops, what are we modeling in right now? >> we're modeling 6%. if we go to market it could be 3.7%. so, it's still considerably higher than the commercial paper. >> so regardless whether it's 3-1/2% or 5-1/2%, there's a massive difference in between. >> yes. >> and you are constricted in terms of the amount of your commercial paper. could you talk about that a little bit? >> yes, thank you, supervisor. the board approved in 2009 the first general fund commercial paper and the amount was a not to exceed 150 million. and we have been very selective. and since we're the first time we've only used 100 million of capacity. so, it was definitely not sufficient to carry this project through construction or optimal to issue for cop which is why we're showing that capitalized interest component. if we're able to expand the
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program, as you can see, the 500 million dollars project and the 150 is not sufficient, we could potentially reduce that 41 million to zero, which would reduce the overall borrowing cost of the transaction. >> so, colleagues, this is something i talked to ms. sese about last week when i was briefed on this project. and i think it's something i'd like to be looking at later on this year. i mean, this is -- if we have this expansion potential for commercial paper program, this is millions of dollars of cost savings for the city longer term. so, not for this today, but something in the future i wanted to flag it. but thank you for talking about that. >> thank you. >> thank you, nadia. as you can see by the schedule, we have a lot going on. >> excuse me real quick, supervisor avalos. >> i just have a quick question. perhaps, john, you might be able to respond. we have our tourist improvement district which probably is going to continue. is that going to have play any role in the actual debt service that we have?
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>> i'm going to let nadia respond to that. >> the tourism improvement district. so, there is a portion that's going to continue that's going to serve the convention visitors bureau outreach and marketing. and then what the other portion that was paying for -- >> the renovation is the .5 [speaker not understood]. >> that part is expiring [speaker not understood]? >> yes, in 2013 which is why it ramps up from .5 to 1.25. if has to [speaker not understood]. * it >> thank you. so, as you can see by the schedule, if you'll bring that up, please, we have a lot going on in the weeks and months ahead. today's presentation is highlighted in the slide in orange. coming up next, february 5th, the board sitting as a committee of the whole will consider an additional resolution to form the moscone expansion district. once ballots are received and counted which will take place during the meeting. if two-thirds of the received
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ballots are favorable, you will then be asked to consider a resolution to form the district along with three items we just presented to you today. so, following the next tuesday's meeting is the entitlement process and c-e-q-a review followed by a court validation action period. and if all goes well, the moscone expansion district and collection of assessments will officially begin on july 1. commercial paper is scheduled to be issued in the fall and construction is slated to begin in november of 2014. cops will be issued beginning in january of 2017. so, supervisors, to recap, we are asking for your support of three items today. number one, an ordinance authorizing the issuance of cops, an ordinance appropriating 507,880,000 of cops and finding fiscal feasibility. and noted on the bottom of the slide if you choose to authorize these items today you may want to consider including
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language clarifying that the committee's action is subject to weighted authority of district hotels awaiting formation of moscone formation district on february 5th. once again, supervisors, we appreciate your time and interest in this very important project for the city and thank you, supervisor kim, for your support and for adding your name as a co-sponsor. in addition to the speakers you heard from today, also joining us in chambers are lisa and kelly from the office of economic and workforce development * . john [speaker not understood] and lynn [speaker not understood] from san francisco travel representing the moscone expansion district. dick [speaker not understood], moscone center gm, and edgar lopez city architect. and at this time we welcome your questions. thank you again for your support. >> thanks, john. thank you to all the speakers that came out today and for those other people that are here for support. and i would like to recognize supervisor kim who has joined us whose district this resides in. supervisor kim, do you have any comments or questions? >> i have a few comments. >> we still have a few speakers. >> i just wanted to say it's
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been a real pleasure to work with the moscone convention center and sf travel on this project over the last year. i know a lot of thoughtfulness went into this. clearly there is capacity issue with moscone and we know that this is an engine through which we are able to attract a lot of our tourism and our tax dollars here in san francisco. and this is why we support it by our hotels and our hotel counsel as well. what i'm excited about is moscone is in our neighborhood and we have many residents in the area and they've done a great job of reaching out to. of our residents and we're really looking forward to building a stronger relationship, particularly with the senior community that resides in that area. we have a lot of senior citizens who are really excited on making moscone convention center not just an attraction for the city, but also more friendly and attractive for pedestrians including themselves. this is also just right next to neighbors, our youth and family zone. so, i think there is a lot of conversation not just with
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children's creativity museum, but other ways we can expand open space opportunities with the expansion we're talking about today. so really excited about all of these things. >> thank you very much, supervisor kim. and ms. sese, thank you for your comments as well. as we think about the expansion of the commercial paper program, one thing to think about already is modeling out what the difference would be for this project itself. just as an example so we can bring that fought full board and committee when we talk about that i think it would be a great idea. with that we have two other speakers would like to can, ted egan is here from our controller's office to give an economic impact report. >> good morning, supervisors.
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ted eagan from the controller's office of economic analysis. this morning our office issued an he can economic impact report on this item. you have it in front of you. * i'd like to share some of the highlights with you now. i won't go through again the details of the financing or the construction, but just go straight to how we view this affecting the economy on slide 4. really from a positive side, this will result in construction spending in the near term in san francisco to the tune of about 500 million dollars and in the long run it will make possible for the convention center to accommodate more attendees which will lead to some number of net new visitors in san francisco and increase of visitor spending. to the negative side this has to be paid for and the financing costs both fall in the hotels and on the city which is effectively withdrawing some funds from the
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local economy. and there is also a repayment risk to the city that we looked at briefly. in terms of the construction costs, again, it's about 500 million dollars over the 2014 to 2019 period and that's fairly easy enough to get an economic impact number for. the visitor spending, however, is slightly trickier so i'll walk you through what we've said about that. that should work, too. thank you. so, according to the consult apartments [speaker not understood] hotels, the attendance at the moscone center is expected to rise to about 1.2 million by 2020, even without the expansion. and what the expansion would permit is an increase to about 1.47 million. so, about 267,000 new attendees could be accommodated with the expansion. and given the average length of
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stay, that translates into about 9 34,000 room nights of new convention attendees. * now, how does that exactly affect the hotel industry is a complicated question of economic analysis and we frankly couldn't get that done in the time frame of this report. but there are some things that are clear. first, the city is very near capacity, what would be a maximum occupancy feasible already. the hotel consultants have suggested the city could not get higher than about 87.6% and the city is already at 83% through all of 2012 or almost all of 2012. in addition, there is relatively little new hotel development in the pipeline, about 250 rooms. and what that means is although there is room for or the convention center has room for about 267,000 new attendees, hotels only have room for about 175,000 new visitors. so, what that means is about 65% of the demand can be
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accommodated and then additional conference attendees will basically be staying in san francisco at the expense of tourists who are not convention attendees. however, that 175,000 new visitors will add a lot to the city's economy to the tune of about 180 million a year in current dollars. when the convention expansion opens, that number will be even bigger because of inflation. and that breaks down into categories like lodging and restaurants and retail trade and transportation. a second point is because the demand for hotel which is driven by the moscone expansion is bigger than the supply, that means that it's very likely that hotel rates in san francisco will rise simply because demand exceeds supply as a result of this. and what that means is it seems very likely that the hotel industry will benefit from higher rates even given their
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assessment on the convention center. from the perspective of the hotel industry, the expansion project will pay for itself. i'll get to the question of whether it kind of pays for itself from the city's perspective in a moment. but with that success, also because it's going to be very favorable for the city's hotel industry, it's likely that city's repayment risk [speaker not understood] of cops is quite low, quite minimal. and again, the arrangement itself has been structured as she told you, in a very conservative way [speaker not understood]. economic fundamental suggests the risk is very low. we use as we always do in our reports our remi model of the san francisco economy to estimate the city-wide economic impact of the legislation. so, specifically we look at 500 million dollars in new construction spending, 1 08 million in annual new visitor spending. we model zero impact of higher hotel assessment mainly because it seems clear that the hotel rate rises will nullify any negative impact on the hotel
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industry for having to pay for their share. we did include the 8 to 10 million general fund impact as a negative in the economic impact simulation. and, again, what our model does is basically track the multiplier effect of all of these impacts to create a city-wide total. and the job creations of this will be fairly substantial compared to other legislation that we have modeled. we would expect the creation of an average of about 790 jobs mainly in construction during the construction phase, and that rises to about 1240 jobs a year on average once the expansion is completed. and, of course, those jobs afterwards are permanent jobs in tourism-related industries like lodging and restaurants and retail trade primarily. there will also be fiscal and direct tax benefits to the city from this economic growth that we just looked at. by 2019 when the completion is
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complete, the expansion is complete, the city should get about .6 million in new business tax, 1.5 million in new sales tax and about 10.9 million in new hotel tax revenue for a total of 13 million in that year. that is notably more than the city's general fund contribution, and that number will increase with inflation. so, what it really means is suggests every year the city will be making indirectly more in taxes than it is contributing its share to the expansion. the only thing i would note in addition and conclusion is that the city's fiscal and economic up side, if you like, is somewhat limited by the fact that there is limited hotel capacity in san francisco. and if we had the capacity to accommodate 100% of the demand, the job benefit and the tax benefit for the city would be greater. and with that i'll take any questions that you have, supervisors. >> thank you, mr. eagan. just, again, to summarize here.
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in terms of the financing. so, 70% is going to be paid for by the expansion district so 30% by the city general fund. it's going to create thousands of jobs in terms of both construction and long-term. i think your job numbers here, were these annual jobs? >> they're annual averages. they're different year to year but that's the average. >> 800 annual jobs in the construction phase. a little over 1200 fern netctionv jobs on an annual basis going forward. and the city's general fund will be technically in the black here, making money off of this? >> yes. >> proposal. and, again, with more commercial paper capability, it would be even more in the black. >> excuse me, supervisor. it's not necessarily true that the general fund will be. i'm counting the hotel tax as a whole. so, not all the hotel tax goes to the general fund. >> fair enough. i get where you're coming from. okay, thanks. i want to make sure the public was very clear on all those combined benefits. colleagues, do we have any questions for mr. eagan? okay, seeing none, thank you very much. appreciate it. and at this point we'd like to call our last speaker, our
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budget legislative analyst for their report. >> mr. chair, members of the committee, supervisor kim, we report on pages 17 and 18 that the proposed expansion of moscone would yield annual additional tax revenues to the city as has been indicated of approximately 5.8 million in fiscal year 17, 18, and up to 6.6 million in fiscal year 21 22. * generally estimated, ourest mass of 24 08 for 37 new one time construction jobs and up to 9 45 ongoing permanent jobs by fiscal year 20 21, 22. provide an estimated 3 82 million in construction expenditures for an additional 3 71,000 square feet. *
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that's an estimated 1,0 $30 per square foot. * be financed with 82.6 million of available hotel assessment fees subject to separate approval based on the results from the hotel ballots and by resolution of the board of supervisors. and then 5.2 million of available city general if you hadxv of approximately 8% of the total 1 billion 105 million 915 [speaker not understood] project costs. now, that includes, of course, the financing costs of which as the chair has stated 70% would be paid from the hotel assessments. increase moscone's ongoing maintenance and operating costs about approximately 1.3 million annually to be paid by the city's general fund and result in total 99 6.5 million of cop principal and interest costs. and that would be repaid with an estimated 6 99 million from
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the moscone expansion district hotel assessments from 2013 through 20 45. and 2 97.3 million of general fund contributions from 2019 through 20 47. * and that ranges from 8.2 million which is currently being paid by the general fund to 10.7 million per year. we also report that the proposed fiscal feasibility is predicated -- and this has been discussed before at committee -- on receiving an estimated 82.6 million of initial available hotel assessment revenues and a conservatively estimated 6 99.2 million from the moscone expansion district assessments from 2013 through 20 45. * so, that would be the primary funding source or the 70% to proposed moscone expansion project. therefore, we conclude that the
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proposed moscone expansion project is not fiscally feasible without that additional hotel assessments and, therefore, the board of supervisors should not find that the proposed project is fiscally feasible if the moscone expansion district is not established based on the results of the pending election of the hotels and subsequently approved by resolution by the board of supervisors anticipated to occur on february the fifth, 2013. similarly, the board of supervisors should not approve the accompanied ordinances to authorize the issuance of up to 507.8 million of the certificates of participation and appropriate the cop proceeds if the moscone expansion district is not approved on february 5th, 2013. however, if the hotel ballots result -- results approve the creation of the proposed moscone expansion district and related assessments, which is
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subsequently approved by the board of supervisors, then based on the city's fiscal feasibility criteria, the budget and legislative analyst finds that the proposed development could be fiscally feasible under chapter 29 of the city's administrative code. so, our recommendation, supervisors, on page 19, we recommend that you amend the proposed resolution and the two proposed ordinances to add a further resolve clause that the board of supervisors finds that the proposed project is fiscally feasible and responsible subject to the approval of the board of supervisors to create and levy the moscone expansion district hotel assessments on february the fifth, 2013 when the board of supervisors would consider this matter. and we recommend that you approve the proposed resolution and ordinances as amended and we would be happy to respond to any questions, mr. chair. >> thank you, mr. rose. i would concur with your recommendation there and we'll certainly entertain that moment after public comment.
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colleague, any questions? okay, thank you very much, mr. rose. thank you to all the speakers. at this time i'd like to open up to public comment. i have a number of speaker cards. ly call them out. if you could line up on the side there. and if there are any other members of the public that would like to speak, please feel free to come forward as well. anthony urbena, craig swan, kevin carol, james lim, and tony north. * colleague [inaudible] i'm with the sheet workers union, local 104, san francisco, california. just to let you know, we are affiliated with the san francisco building trades council, with the alliance for jobs and sustain able growth and the san francisco labor council. but i am here talking on behalf of the sheet metal worker. we definitely support this project. it's a big project that looks like it's coming down right now. we have about 18% unemployment. although there is a lot of work coming with the city, we're hoping in the next year that is
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completely gone and all our members are working. like i said, as far as the sheet metal workers 104, we definitely support this project and look forward to getting our members out on that job. >> thank you very much. next speaker, please. hi, good morning, supervisors. i'm tony [speaker not understood], chair of the tid. i am past chair of san francisco travel and hotel council. also general manager of the st. regis hotel and residences. we have 300 employees and our property, which is really directly across the street from moscone center. under the proposal before you today, the moscone expansion district will support and enable the city to invest important infrastructure project. we're very excited as a community -- hotel community about the project. the funding partnership is almost identical as you've seen today for our tid formed back in 2008.
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as through the vehicle of the tid, we've been able to have great sales marketing and promotion opportunities to support the city and our increasing occupancy and adrs. we hope you support this proposal for us forming the med and funding the expansion of moscone center. >> quick question for you. from a hotel's perspective, just curious. been involved in the hotel industry for awhile. adr impacts, [speaker not understood], what do you think about a project like this and what will it do for you? i think we're still very optimistic. we know the statistics have shown we're getting to capacity on occupancy. actually we haven't reached market at the st. regis. we're relatively new in the city. but we think that with the expansion we'll have more opportunity to spread more evenly through the annual calendar. our business, i do think there's more capacity there. and with that kind of compression we can find higher
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adrs. and most of us are in the position happily at the moment, with increasing adr it helps the flow throughs and helps us be more economically viable. >> okay, thank you. you bet. thank you. >> next speaker, please. good morning. my name is greg swan, i'm general manager of the sherri dan fisherman's wharf. i apologize, i'm getting over laryngitis. i hope you can hear me. [speaker not understood]. at the sherri dan fisherman's wharf that employs 2 80 employees year round. our section of the city you can consider the fringe area of the city. we're not in the core group of hotel next to moscone center. definitely sees a benefit from moscone center and this proposed expansion. as you know, as you can probably realize, most of our business is concentrated with summer travel season and during
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weekends when there is a lot of leisure travel. so, we have a lot of unused capacity at fisherman's wharf mid week when convention business really helps boost the occupancy in the city. we as a community down at fisherman's wharf support. this we see there is great up side potential and forming the public/private partnership, we see as very positive as we've seen some great results from the tid that's already been set up. so, we definitely down at the wharf support this project. >> thank you. if you have any questions. >> thanks very much. next speaker. good afternoon, supervisors. my name is kevin carol. i'm the executive director of the hotel council of san francisco and the council fully supports the proposals you are considering today. that will enable the city to enter into a partnership with the hotel community to invest in the expansion of moscone center. moscone center generates currently hosts 1 million visitors each year and generates more than 1.6 billion in visitor spending.
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this in turn contributes to millions of dollars to the city general fund and supports thousands of jobs. the proposed expansion will generate even more benefits. tourism dollars generated from moscone center activities ripple into every neighborhood in the city. through rate compression which pushes businesses into neighborhoods where business in the neighborhood when hotels around the convention center are actually full, it pushes business out to other hotels outside the downtown corridor. it also helps with paychecks, local purchases and taxes paid by our visitors that are staying there. for these reasons, the hotel community is proud to partner with the city and we thank you to help grow our economy through the joint investment opportunity, we will be entering into with the approval of the proposals that are before you here today. * so, we thank you and we thank supervisor kim also for her partnership with us on this. >> thank you very much. next speaker, please. good afternoon, supervisors. my name is james lim, i'medth
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regional managing director for [speaker not understood] hotels. [speaker not understood] operates 11 hotels in the city and it's spread throughout the neighborhoods as well in downtown san francisco. we support over 800 jobs, local jobs in the city as well. some of our hotels include the [speaker not understood] in japantown, the hotel rex, carlton, laurel lynn at laurel heights, [speaker not understood]. what's wonderful about this initiative is that we know that many of our downtown hotels benefit whenever there is a convention in the city. and what happens is that it creates compression and the business that would otherwise go to this hotels in the city also are spread throughout the neighborhoods such as the laurel and the kabuki and natoma that normally would not get that demand. but whenever there is a convention in the city, we get that compression and the demand. because of these benefits, you know, we really want to support this as a community as well as
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our company supports this as well. and we do hope that you support this. thank you. >> thank you very much. next speaker, please. mr. lim, did you forget a key or somebody? thank you, mr. paulson. looks like you're expanding moscone big size ♪ and i looked in from the inside annual budget eyes in your budget eyes in your eyes in your big budget eyes in your [speaker not understood] eyes oh, oh, oh, [speaker not understood] what a big size high-rise what a big large buy from you guys oh, my, my, it will hit the sky
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in your budget eyes in your eyes what a big buy i looked in from the budget inside in your budget eyes make jobs for you guys a big buy i can't hide and it's gonna come up big right ride over the years ride oh, i get so tired working so hard, want it better make it come along in your budget eyes. ♪ >> thank you, mr. paulson. i do have one more speaker card from -- i can't tell the first name, monet on the back end. if you go to the other. good morning or good afternoon, supervisors. my name is [speaker not understood] and i live in district 6. and i support this.
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it's real good. but the thing is we're losing space. it's not too much space down there, is it? i know i walk through there every once in a while. so, are we going to start building up, is that what's going to happen? because all this money, especially on the screen, was kind of confusing to me, give me a little headache. but also, i just -- with the jobs, the construction jobs and i'm quite sure y'all used to me saying this. please don't let the unions put a strangle hold on you because there's more people that aren't able to get into these unions or know enough about getting into the unions to get some of these construction jobs. there's a lot of jobs within district 6. and we need to give out more resources, whatever, about how to get some of these union jobs because if i'm not mistaken it's 25% of the jobs go